Changing annuities: sales fall more than a third and rates drop in summer 2014
The number of annuities sold fell by more than a third between the first and second quarters of 2014, according to the Association of British Insurers (ABI). The figures reveal that 27,902 fewer annuities were sold in Q2 than in Q1 – a 37.5% fall.
The statistics show:
- the total value of annuities sold fell from £2.5 billion in Q1 to £1.8 billion in Q2
- 55% of people who bought an annuity purchased from their existing insurer rather than from a different provider
- more people with pots under £5,000 bought annuities from a different insurer
- the number of people buying income drawdown contracts increased by 55% on the quarter.
In addition to this, annual income from standard annuities dropped 2.6% in August 2014, according to Investment Life and Pensions Moneyfacts. Figures show that average annual income fell from £2,847 to £2,797 in August, equating to £1,540 less income over a 20 year retirement (based on a £50,000 pot for a 65-year-old). This is the biggest monthly fall since August 2011 and it means standard annuity income is down by 3.2% in 2014.
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